Ministry of Finance says VIRKE worries over amendment to Act on Mutual Funds are unfounded

Senior Legislative Counsellor Harju: In other EU countries one can already invest in mutual founds through administrative registers

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Finland’s Ministry of Finance refutes the criticisms voiced by Janne Marttinen from the authorities' cooperation development project VIRKE (HS 13.8.2009) against the proposed amendment to the Act on Common Funds (Mutual Funds).
      According to Marttinen, if implemented the amendment would lead to the creation of a “blue-and-white tax haven” in Finland.
      In Marttinen’s view, should the amendment come into effect, it might contribute to the increase of tax evasion, tax crime, and money laundering. When a government bill fails to specify the penalties for breaking the law, the international operators will pay little heed to adhering to the Finnish regulations, warns Marttinen.
      At the heart of the controversy is the question of whether one should be allowed to purchase Finnish investment fund shares under cover of the anonymity brought on by administrative registration, and if so, under what conditions.
     
The administrative registration refers to the practice under which a foreign investor is given the possibility to list with the national book-entry register without having his own name appear in the register.
      The banking sector has expressed a wish that a similar administrative registration practice could be introduced with regard to buyers interested in mutual fund schemes as well. This would guarantee mutual funds an equal standing with shares.
      The branch's lobbying groups have pursued the issue vigorously through Parliament, which has consequently presented the government with a resolution to proceed with a law proposal on the matter.
     
”Such a practice already exists in all the other comparable EU countries”, explains Ilkka Harju, Senior Legislative Counsellor at the Ministry of Finance.
      “We looked into the matter with regard to ten or so comparable countries. This way Finland would match the international practice.”
      Neither the Financial Supervisory Authority (FIN-FSA) nor the National Bureau of Investigation (NBI) see any problems with introducing the administrative registration practice to mutual funds, Harju says.
     
In Harju’s estimation, those who stand against the administrative registers see as the basic problem the fact that the registers would enable a Finnish investor to evade taxes by investing money in Finland via a tax haven.
      Harju charges that the fundamental flaw with this type of thinking is that such investors are already able to invest their assets in various funds in all other EU countries.
      Harju points out that free movement of capital is at the heart of the single market and is one of the EU’s basic cornerstone freedoms.
     
Thus wealthy Finns could set up an investment company abroad and move their assets there, should they want to pursue a lower tax rate for example for their income from dividends.
      “This is perfectly legal tax planning.”
      Even these Finns have to report their holdings in Finnish stock-listed companies in insider registers.


Previously in HS International Edition:
  Expert argues proposed amendment to Act on Mutual Funds may turn Finland into tax haven (13.8.2009)

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